Pack 1

Question 1

What is economics

Answer 1

Economics is a social science which means it is concerned with the study of human behaviour. It investigates how scarce resources are allocated to provide for unlimited human wants.

Question 2

What is the difference between positive and normative statements

Answer 2

Positive statements can be tested to be proven true or false.

Normative statements are expressions that things are right or wrong, they tend to be based on value judgements.

Question 3

What is a value judgement and give an example

Answer 3

A value judgement is a decision made based upon a particular set of values. For example, certain individuals may be more likely to save more of their income rather than spend it whereas, others may be more likely to spend more than save.

Question 4

What are the 4 factors of production

Answer 4

Land
-stuff like wood, oil and fish

Labour
-the human input into the production process (workers, managers).

Capital goods
-Man made physical goods like machines and tools.

Enterprise
-the entrepreneur provides their initial ideas.

Question 5

Distinguish between renewable and non-renewable resources

Answer 5

Renewable resources stock levels can be replenished naturally over a period of time - solar power is renewable as it is harnessed from the sun.

Non renewable resources stock levels decrease over time as they are consumed - fossil fuels are non renewable as they will run out one day.

Question 6

What does scarcity mean and give an example of a scarce resource

Answer 6

Scarcity is when there are unlimited wants and limited resources.

For example, people have unlimited wants for oil but there are limited resources for oil.

Question 7

How does the economic problem differ from scarcity

Answer 7

The economic problem is how best to allocate scarce resources between alternative uses.

Question 8

Give an example of at least 3 ways of tackling any economic problem

Answer 8

-Willingness to pay (like expensive houses and cars)
-Merit/Need (like A&E treatments, people with the most severe injuries are treated first.
-First come first served (like barber shops which people who have been waiting the longest get served first)

Question 9

Who are the 3 economic agents

Answer 9

-Consumers (individuals and households)
-Firms (businesses)
-The government